CMBS set to hit pre-boom levels

Commercial property lenders are likely to loosen the spigot in 2014, according to a new survey by PricewaterhouseCoopers and the Urban Land Institute.

Commercial mortgage-backed securities loan originations may exceed $100 billion in 2014, according to the survey, being released today. The number would exceed that seen in any period except 2005 through 2007, when the real estate bond market surged before coming crashing down.

Despite rising interest rates, demand for commercial properties should rise in tandem with an improving economy, the survey, seen by Bloomberg News, indicates. This is because lenders such as commercial banks, insurers and private investment firms are becoming more comfortable with market fundamentals, PwC’s national real estate practice leader Mitchell Roschelle told Bloomberg News.

“Some of the credit-quality concerns that people had with real estate have evaporated with time,” Roschelle said, and added that the Federal Reserve’s recent talk about tapering the economic stimulus didn’t seem to hurt the commercial real estate market.

In September, CMBS delinquency rates hit the lowest levels seen in the past three years, according to analytics company Trepp.
[Bloomberg News]  – Hiten Samtani